Government contractors may be hired to rebuild countries after a war or natural disaster. They may build bridges, transport supplies to villages and soldiers or participate in other activities they have been hired to do through a government contract or subcontract. U.S. government contractors and subcontractors are required to purchase workers’ compensation insurance under federal law. Understanding the laws that may apply can help individuals protect their rights.

Federal Laws

Potential federal laws that have an impact on a U.S. contractor’s or subcontractor’s requirement to secure workers’ compensation for employees include the Defense Base Act, the Longshore and Harbor Workers’ Compensation Act and the Federal Acquisition Regulation. The United States Department of Labor administers the Defense Base Act and ensures that injured employees are provided with benefits they are entitled to receive.

Defense Base Act

The Defense Base Act covers employees who are working for private employers on military bases of the United States and lands that the nation uses for military purposes, employees who work on public work contracts with a contract with a United States government agency, employees working on construction and service contracts related to national defense or associated with war activities outside the country, working on contracts funded through the Foreign Assistance Act or working for American employers who provide welfare or other types of services of this nature for the benefit of the armed forces outside the country.

The law pertains to workers on military bases, public workers or others who are engaged in work deemed necessary to U.S. national security while working on a military contract from a froeign government, employees that provide services that the federal government funds that have nothing to do with military work and public workers the federal government funds for work to be performed outside the nation. The law also applies to workers who on assignment for a federal government contractor in a foreign country.

Insurance Requirements

Under the Defense Base Act, all applicable contractors and subcontractors are required to secure workers’ compensation insurance for their employees before commencing work under the contract. They are also responsible for remaining compliant with the law and keeping workers’ compensation insurance in place. This requires an employer to purchase a separate overseas workers’ compensation insurance policy rather than a domestic policy.

Under the Longshore Act, the employer has the option of securing a workers’ compensation insurance policy as described above or self-insuring employers.

Benefits

Employers are liable for securing payment for disability, medical and death benefits to injured workers who are injured or killed in the course of employment, whether or not the death occurred during active work hours. Monetary benefits are typically two-thirds of the employee’s average weekly earnings up to a maximum. This maximum is approximately $1,030 per week. Death benefits are equal to half of the employee’s average weekly earnings to the surviving spouse or to one child or two-thirds of this amount if the decedent had two or more survivors, subject to the maximum weekly rate. Permanent total disability and death benefits might be payable for life. Additionally, employers are required to provide coverage for medical expenses that stem from the injury. Injured workers have the right to receive medical treatment by a physician of the worker’s choice.

If the employer fails to secure payment for this compensation, the contractor itself can be held liable for the benefits and be required to pay them. Alternatively, the injured worker or his or her family may pursue a lawsuit against the employer based on the employee’s injury or death if the employer did not have the required workers’ compensation policy in place. This type of claim cannot be avoided by the government contractor alleging that the employee assumed the risk by working in a foreign and possibly unstable country or in a federal contract.

Legal Assistance

Filing a workers’ compensation claim under federal law and using a federal program may be difficult. Additionally, some contractors apply for waivers of the requirement to secure workers’ compensation. An employment lawyer familiar with workers’ compensation cases for federal contracts can be a tremendous asset during the application and appeal process. The workers’ compensation lawyer can review the circumstances that led up to the claim, the various insurance programs that are in place and the relationship between the parties to determine the potential options that are available to the injured worker.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.